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Israel- Where Breakthroughs Happen


The Israeli breakthrough opportunity summarized

The Israeli breakthrough opportunity summarized

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  • 1. State of Israel Ministry of Industry, Trade & Labor - Foreign Trade Administration Investment Promotion Center Invest In Israel Where Breakthroughs Happen
  • 2. Country ID Area: 22,000 sqkm Population: ~ 7.2 millions GDP: $168 Billion (2008F) Main Cities: Jerusalem, Tel-Aviv, Haifa, Be’er Sheva Maps: Wikipedia
  • 3. Main Economic Indicators 2005 2006 2007 2008F GDP (current prices, B$) 131.2 142 161.8 ~168 GDP Growth Rate (%) 5.3 5.2 5.3 ~4.0 GDP/Capita (Current 18,700 19,900 21,000 ~21,730 Prices) GDP/Capita (based on 29,044 30,464 31,767 - purchasing power parity) Exports (goods & 57.9 62.6 70.65 ~78 services, B$) Imports ($ billion) 57.5 61.7 73.7 ~84 Inflation (CPI, %) 2.4 -0.1 3.4 ~5.0 Unemployment (%) 9.0 8.4 7.5 ~7.0 Sources: Bank of Israel, Ministry of Finance, International Monetary Fund
  • 4. Main Economic Indicators (Graphs) Unemployment (%) Inflation % (excl. housing) 2005 2006 2007 2008 2005 2006 2007 2008F 10 6 5 8 4 6 3 4 2 1 2 0 0 -1 GDP Growth Rate Exports ($ Billion) 2005 2006 2007 2008 2005 2006 2007 2008 100 6 5 80 4 60 3 40 2 20 1 Source: Bank of Israel Data 0 0 Sources: Bank of Israel, Ministry of Finance, International Monetary Fund
  • 5. Foreign Direct Investment (millions of US$) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 97' 98' 99' 00' 01' 02' 03' 04' 05` 06' 07' 08F Source: Bank of Israel
  • 6. Foreign Companies Invested in Israel - Some Examples US Europe Asia • • • Microsoft British Telecom Sony • • • Epix SAP Toyo Ink • • • AOL Time Warner Philips Medical Fuji • • • Intel Alcatel Honda • • • IBM Siemens Sumitomo Trading • • • Perrigo Cable & Wireless Nomura • • • Cisco Systems Deutsche Telekom Samsung Electronics • • • GE Healthcare Telecom Italia Daewoo • • • Lucent Generali LG Group • • • 3Com Nestle Hyundai • • • Hewlett Packard L’Oreal Acer Computers • • • Stryker Danone Macronix • • • Motorola Unilever Winbond • • • Sun Microsystems Vilmorin Hutchison Telecomm • • • Johnson & Johnson Veolia Scigen • • • Dentsply Ferring Jain Irrigation • • • Kodak MERCK Serono Sun Pharmaceutical
  • 7. Multinationals… Microsoft built their first R&D facility outside the US in Israel Cisco built their first R&D facility outside the US in Israel Motorola’s Israel facility is the company’s largest development center worldwide. IBM chose Israel for its first VC investment outside of the US Intel has 4 R&D facilities and 2 manufacturing centers in Israel, employing 7,000 Israelis Google opened not only one but two R&D centers in Israel
  • 8. R&D Centers of Leading Foreign Companies Company No. of R&D Employees Sector Intel 5,400 Semiconductors HP- Indigo 2,500 Capital Equip IBM 1,300 Computing Equip Cisco 1,000 Software Motorola 1,000 Telecom Applied Materials 1,000 Capital Equip. HP-Mercury 1,000 Software SAP 800 Software Freescale 570 Semiconductors Microsoft 600 Software Over 110 foreign companies have established R&D centers in Israel Over 35,000 personnel are employed in these R&D centers in Israel
  • 9. Intel – Success story Over 7000 employees Israeli Centers Developments Include: 4 active R&D Facilities 2 Manufacturing Centers 1st R&D P. Tikva Acquired Acquired Center R&D DSPC – Envara – Outside Center $1.6 Bil 40 Mil USA opened Fab 18 manufacturing Acquired Acquired in Haifa center Opened in Mobilian Oplus – Kiryat-Get – $1.6 Bill $100 Mil 1985 1999 2001 2005 1974 2004 2008 1st Manufacturing Yakum Jerusalem Yokneam Fab28 m. plant center outside USA R&D R&D R&D Opened in Kiryat opened in Jerusalem Center Center Center Gat – $3.5 Bill
  • 10. Microsoft – Success story Over 500 employees Herzelia R&D Center is one out of 3 Strategic Centers. Over US$ 700 million only Focus: Internet, Security in M&A during 2002-2008 1st Branch Panorama Maximal Gteko Outside USA - Innovative Secured 3 employees Intelligence Dimensions Invest in Pelican Yadata, Orion Fund Security Kidaro 1991 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 1989 Zoomix Haifa R&D Whale Center Communications Herzelia Peach Networks R&D Ctr.
  • 11. Israel Hi-Tech Cluster “Solid” Infrastructure Government Incubators Support Experienced 2nd time entrepreneurs Defense Availability of Existing University Global Technical Corporate Computer Technology Hi-tech People & R&D Science Infrastructure Companies Management Students Expertise Leading Academic Institutions Foreign & Research Technology Corporate Firms Spin- Offs Seasoned VC Community Entrepreneurial Culture Immigration “Soft” Infrastructure Source: IVA
  • 12. Significant Selected Mergers & Acquisitions Acquirer Amount Sector Company Date HP Jul 2006 4500 Mil ICT Mercury B. Hathaway 4000 Mil Metal Cutting Iscar May 2006 Sandisk Corp 1550 Mil ICT M-Systems Jul 2006 Sun Pharma 454 Mil Pharma Taro May 2007 J&J Nov 2008 438 Mil Life Sciences Omrix Oct 2007 368 Mil Semiconductors Saifun Spansion Nov 2007 AOL 363 Mil Quigo Software IBM 300 Mil XIV Jan 2008 ICT S. Jude Medical 300 Mil Intra Body Nav Mediguide Dec 2008 Microsemi 245 Mil Semiconductors PowerDsine Apr 2007 Motorola 180 Mil ICT Terayon Apr 2007 Samsung 150 Mil ICT Transchip Nov 2007 RedHat 107 Mil Software Qumranet Sep 2008 Sources: IVC-ONLINE and other public sources
  • 13. NASDAQ Non US listed companies- Selected countries 80 70 60 50 40 30 20 10 0 Is C B A Ja N M Fr C U H Si an er us et ay ni on ra ar an ng pa he m te el sh a tr m g ce ap n da ud d al rla an K al or ia K on a lI nd in Is e sl g la gd s an nd om ds s Source: NASDAQ (2007) Analysis Invest in Israel
  • 14. Israel’s Competitive Edge – IMD World Report 2007 Country Rank 1st 2nd 3rd 4th Sweden Finland Japan BUSINESS EXPENDITURE ON R&D Israel TOTAL EXPENDITURE ON R&D Sweden Finland Japan Israel AS A PRECENTAGE OF GDP AVAILABILITY OF QUALIFIED Israel Singapore India Iceland ENGINEERS Netherlands VENTURE CAPITAL AVAILABILITY U.S.A Israel Denmark Singapore INFORMATION TECHNOLOGY SKILLS Iceland Israel Korea Hong FLEXABILITY & ADAPTABILITY OF Israel Iceland Ireland THE WORKFORCE Kong HIGHER EDUCATION ACHIEVEMENTS Canada Japan Israel Singapore Israel Ranks 21 Source: IMD World Competitiveness Yearbook - 2007
  • 15. Israel’s Competitive Edge – WEF Report 2007 Country Rank 1st 2nd 3rd 4th AVAILABILITY OF SCIENTISTS AND Japan Finland India Israel ENGINEERS U.S.A Finland VENTURE CAPITAL AVAILABILITY Israel Netherlands New Germany JUDICIAL INDEPENDENCE Israel Netherlands Zealand Sweden Singapore Iceland TECHNOLOGICAL READINESS Israel QUALITY OF RESEARCH Switzerland U.S.A U.K Israel ORGANIZATIONS Israel Ranks 17 Out of 131 Countries “Israel does spectacularly well on those indicators that capture technology innovation, education, human capital and this accounts for the very rapid movement of the Israeli Economy .” (Augusto Lopez-Claros, Chief Economist, World Economic Forum, December 2006) Source: WEF – The Global Competitiveness Report 2006 – 2007
  • 16. Areas of expertise Telecom Information Technology Microelectronics Software Life Sciences Medical Equipment Biopharma Water Technology Clean Technologies Aerospace Design
  • 17. Israeli Breakthroughs – Selected Examples Given Imaging – First ingestible video camera used to view the small intestine and diagnose disorders Intel’s Core 2 Duo, Centrino and Pentium 4 microprocessors M System’s Disk on Key and Disk on Chip flash memory GE Healthcare’s portable cardiac ultrasound system The Phillips Brilliance CT Scanner IP Telephony invented by founders of Vocal Tec AOL Instant Messenger ICQ Zip compression technology
  • 18. National Program Promoting Water Technologies Program Goals Increase Israeli Export of Water Technologies - $US 2B by 2010 Enhance International Investment – Multinationals, Governments Promote Water Technology R&D Program Strategies Strengthen Human Capital – Academic programs, scholarships, professional mentorship of start-ups Concentrated R&D – promoting academic research, Water-dedicated technological incubators Promote Israeli Water Technology Implementation in Israel Market Israel’s proven abilities worldwide – relations with potential partners, promote media coverage, marketing campaign,
  • 19. Government Support The Law for the Encouragement of Capital Investments Competitive grant program Tax exemption path for manufacturing facilities The Law for the Encouragement of Industrial R&D – Incl. special incentives to Traditional Industry R&D The Global Enterprise R&D Cooperation Framework The Global Enterprise R&D Project Centers Bi-national funds (such BIRDF, KORIL-RDF) Special tax benefits for R&D centers Tax exemption for venture capital investment Employment grant program Training grant program
  • 20. Summary Israel is a center of innovation and technological excellence Israel is a leading entrepreneurial society Israel enjoys an excellent track record in breakthrough discoveries and innovations Future results are expected to improve due to the maturity of the market Foreign companies can cost effectively conduct cutting edge research in Israel Israel’s government and policies strongly support investment and economic growth
  • 21. quot;Israel – a reservoir Bubbles of innovation that will advance our competitiveness.quot; .quot; Professor Eric quot;The landscape (in Israel) provides the quot;Israel is an Reinhart, President perfect environment for incredible opportunity of Siemens researching and for us. It provides a Medical, developing water growth engine for September 2006 quot;What is exciting to me technologies in 'real- innovation for us.quot; about Israel is that it is world' conditions and Richard Nottenburg, the most then marketing and Motorola's executive entrepreneurial and selling them globallyquot; VP chief strategy spirited place I have Dr. Roger Radke, CEO officer, June 2006 come across outside of the Water the U.S.quot; quot;We were attracted by Technologies Division the outstanding Simon Levene, Yahoo's of Siemens, June 2006 research and managing director of researchers here.quot; corporate development, June 2006 David M. Bowser, quot;It's no Johnson & Johnson, exaggeration to say VP, Corporate Office of that the kind of Science and Technology March innovation going on 2006 in Israel is critical to quot;The quantity and the future of the quality of software technology engineers in Israel quot;Some Americans made it logical that business. have come to the we would open a Bill Gates, Founder Middle East looking R&D center here at for oil. We came to Microsoft, 2005 some point.quot; the Middle East David Woodside, looking for brains, EMEA Manager, and we stopped at Google February Israel.quot; 2006 Warren Buffett, Bershire Hathaway, September 2006
  • 22. State of Israel Ministry of Industry, Trade & Labor Foreign Trade Administration Investment Promotion Center 5 Bank Israel St., Kiryat Ben-Gurion Jerusalem, Israel www.investinisrael.gov.il infoipc@moital.gov.il Tel: +972-2-6662607 Fax:+972-2-6662983